Self-represented litigants (Litigants in person) costs

 

We are receiving more instructions from self-represented litigants (individuals and companies) to advise them on costs, prepare Bills of Costs and assist them in detailed assessment proceedings, than before either directly or via Solicitors. This reflects the increasing trend of Litigants representing themselves in Courts and Tribunals and it’s therefore important to be aware of the entitlement they have to recovery of costs, whether you have partially represented an LiP, acting against an LiP or preparing a budget for your client who was prior to your instruction acting for their self

 

What is the legislative authority for costs?

 

The Litigant in Person (Costs and Expenses) Act 1975 (as amended) provides:

 

  1. Costs or expenses recoverable

 

  • Where, in any proceedings to which this subsection applies, any costs of a litigant in person are ordered to be paid by any other party to the proceedings or in any other way, there may, subject to rules of court, be allowed on the taxation or other determination of those costs sums in respect of any work done, and any expenses and losses incurred, by the litigant in or in connection with the proceedings to which the order relates.

 

This subsection applies to civil proceedings—

 

  • in England and Wales in the county court or in Northern Ireland in a county court, in the family court, in the Senior Courts, in the Court of Judicature or in the Supreme Court on appeal from the High Court or the Court of Appeal,
  • before  the Lands Tribunal for Northern Ireland,

(ba) before the First-tier Tribunal or the Upper Tribunal, or

(c)in or before any other court or tribunal specified in an order made under this subsection by the Lord Chancellor.

 

  • Where, in any proceedings to which this subsection applies, any costs or expenses of a party litigant are ordered to be paid by any other party to the proceedings or in any other way, there may, subject to rules of court, be allowed on the taxation or other determination of those costs or expenses sums in respect of any work done, and any outlays and losses incurred, by the litigant in or in connection with the proceedings to which the order relates….

 

What level of costs are litigants in person entitled to?

 

Costs for self-represented litigants are referred to in CPR 46.5 which provides the relevant guidance on what a self-represented litigant can seek to recover from a paying party following an order from the Court:

 

CPR 46.5

 

(2) The costs allowed under this rule will not exceed, except in the case of a disbursement, two-thirds of the amount which would have been allowed if the litigant in person had been represented by a legal representative.

 

(3) The litigant in person shall be allowed –

(a) costs for the same categories of –

(i) work; and

(ii) disbursements,

which would have been allowed if the work had been done or the disbursements had been made by a legal representative on the litigant in person’s behalf.

(b) the payments reasonably made by the litigant in person for legal services relating to the conduct of the proceedings; and

(c) the costs of obtaining expert assistance in assessing the costs claim.

 

(4) The amount of costs to be allowed to the litigant in person for any item of work claimed will be –

(a) where the litigant can prove financial loss, the amount that the litigant can prove to have been lost for time reasonably spent on doing the work; or

(b) where the litigant cannot prove financial loss, an amount for the time reasonably   spent on doing the work at the rate set out in Practice Direction 46.

 

(5) A litigant who is allowed costs for attending at court to conduct the case is not entitled to a witness allowance in respect of such attendance in addition to those costs.

 

(6) For the purposes of this rule, a litigant in person includes –

(a) a company or other corporation which is acting without a legal representative; and

(b) any of the following who acts in person (except where any such person is represented by a firm in which that person is a partner) –

(i) a barrister;

(ii) a solicitor;

(iii) a solicitor’s employee;

(iv) a manager of a body recognised under section 9 of the Administration of Justice Act 19851; or

(v) a person who, for the purposes of the 2007 Act2, is an authorised person in relation to an activity which constitutes the conduct of litigation (within the meaning of that Act).

 

It is at this point, worth highlighting the level of costs recoverable and there are two potential avenues upon which costs can be claimed provided (CPR 46.4). Where a litigant in person cannot prove financial loss (CPR 46.4 (b)) the amount of costs to be allowed for any item of work and time reasonably spent on doing the work is set out in Practice Direction 46:

 

PD 46 3.4 states that the amount, which may be allowed to a self-represented litigant under rule 45.39(5)(b) and rule 46.5(4)(b), is £19 per hour. This is therefore the rate that would be included in any budget/bill of costs when seeking recovery on behalf of a litigant in person/considering reasonable costs to be paid if you are the paying party.

 

It is becoming increasingly common however for a self-represented litigant to have suffered financial loss. Pursuant to CPR 46.4 (a) it is necessary to show that financial loss can be proved for reasonably doing the work.

 

For a self-represented litigant, the task of conducting proceedings, preparing pleadings, preparing for, and attending hearings etc is not only daunting but time consuming. The self-represented litigant may have to take time off work. For those who are either self-employed or a company or a corporation and others defined by CPR 46.5 (6) (b) they have to divert time away from their business or occupation resulting in significant financial loss. It is therefore important to keep a daily record of work, what was done and how much time was spent on each item of work. For the self-employed or company who have diverted time away it is particularly important to demonstrate the impact on their business, if there has been a downturn in profit that has been caused by the piece of litigation, then that ordinarily will be reflected in the year end accounts. There may be special circumstances where for a business, contracts or opportunities have been lost resulting in a downturn in profit or may have caused a loss. It is important to produce evidence to demonstrate that there is a direct link between lost opportunities and downturn as a result of conducting the litigation. This should be in the form of documented evidence.

 

If financial loss can be evidenced and supported. It may be that the hourly rate provided for at PD 46 (£19 per hour_ is significantly increased such as in the matter of Spencer and another v Paul Jones Financial Services Ltd (unreported), 6 January 2017 (Senior Courts Costs Office)

 

Summary

 

Master James held that a Claimant self-represented litigant (“C”) could recover costs at an hourly rate of £150 per hour. The burden of proving such financial loss lies on the claimant, the burden should not be high or disproportionate.

 

The facts

 

C had pursued a claim against D which settled for £220,000. C, a former solicitor with his own legal services company, sought to recover his own costs at his hourly rate of between £160 per hour. He claimed that, considering his time spent and his hourly rate, but for the litigation, he would have earned £361,000. C produced evidence including his unaudited company accounts. C’s business suffered a significant downturn during the litigation period. C contended that this downturn was a direct result of time spent on his claim. However, C did not identify the specific work that he would have been working on in his business during a specific day that he spent conducting the litigation.

D argued that the C’s evidence did not meet the required degree of specificity to depart from the prescribed rate of £19 per hour as C had not provided more detail about specific instructions that he may have missed or had turned down.

 

Decision

 

The Master dismissed D’s arguments and considered the bar which the self-represented litigant had to overcome to prove financial loss should not be impossibly high, nor disproportionate or expensive. Established case law (see below) did not insist on chapter and verse of a self-represented litigant’s daily diary. The Master found C’s unaudited company accounts persuasive and noted that the evidence showed C had always worked at full capacity and would have been able to do so, but for the litigation. The Master accepted C’s evidence that most of his existing work, throughout the litigation, was charged at usual charge out rate of £160 per hour. The Court allowed C’s costs at £150 per hour. The following cases were referred to by Master James, specifically highlighting key points with regard to evidencing ‘financial loss’.

 

  1. N & R Devine Limited v McAteer [2013] NIQB 102:

 

“In short, financial loss has to be quantified with a degree of specificity. Otherwise the litigant fails to discharge the burden of proof and is confined to recovering for the amount of time reasonably spent by him in doing the work at the rate of £9.25 per hour (see also Knight and Anor v Maggioni and Others [2006] EWHC 90056 (Costs) 10 April 2006 per Master Simmons, Costs Judge.”

 

  1. Mainwaring v Goldtech Investments Ltd [1997] 4 All ER 467:

 

“Whether a litigant in person has suffered significant loss of earnings is a matter peculiarly within his or her own knowledge. Sometimes the position will be obvious and each side will accept it without the need for any affidavit evidence: at one extreme, for instance, a self-employed tradesman in a small but profitable way of business, who has more customers than he can cope with and can fill every working hour to advantage; at the other, a retired civil servant with an index-linked pension who finds the conduct of litigation a more interesting pastime than bowls or crossword puzzles.”

 

To summarise, regardless of the costs that can be recovered (either reasonable or on the basis of suffering financial loss), the costs allowed cannot exceed, except in the case of a disbursement, two-thirds of the amount which would be allowed if the self-represented litigant had been represented by a legal representative (CPR 46.5 (2)).

 

The self-represented litigant is entitled to be paid his reasonable disbursements; payments reasonably made for legal services relating to the conduct of proceedings; the costs of obtaining expert assistance in assessing the costs claim.

 

If you have any queries, whether you are now acting for a previous Litigant in person, or dealing with a budget where you need to consider these costs, or perhaps you have been served with a costs claim from a litigation in person, we will be able to assist you. Contact us Marinus@rcostings.co.uk or telephone 01480 463499

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